Montana Attorney General Steve Bullock has announced a new mortgage foreclosure prevention program funded with the state’s share of a multibillion-dollar settlement with large lenders.

The program is funded by the $5.8 million Montana received as part of a national settlement last February with five large banks that were involved with fraud and deceptive lending practices.

Bank of America, Citibank, JP Morgan Chase, Wells Fargo and Ally/GMAC paid $25 billion, much of which was distributed to states.

“Wall Street and the so-called too-big-to-fail banks have a lot to answer for,” Bullock said. He was in Kalispell announcing the program in the Ashley Square business complex, where a new financial counseling service office soon will be located.

Montana will use about $3 million to hire additional counselors at Neighborworks Montana and Rural Dynamics Inc. to help distressed homeowners who are eligible get loan modifications and other forms of refinancing.

In Kalispell, there will be two counselors working under Rural Dynamics Inc., a nonprofit organization that used to have an office on Meridian Road until May of last year when it was closed.

“It’s an amazing opportunity for us to turn around and reopen an office,” said Tom Jacobson, executive director of Rural Dynamics.

About $1 million of the state’s money will go to the Montana Legal Services Association to provide legal assistance to homeowners who are faced with foreclosure. About $450,000 will go to the state’s general fund.

Bullock said the bulk of the $25 billion will be available to provide relief to homeowners, and there is no limit on how many people in Montana may qualify for assistance.

He said the emphasis on counseling is to get as many Montanans “at the front of the line” as possible.

“I think we will be able to reach as many distressed homeowners as quickly as possible,” Bullock said, noting that his office will work with county clerks so his office will be able to send informational letters on how to get assistance to residents who receive foreclosure notices.

Maureen Rude, director of operations for Neighborworks Montana, said providing assistance to those facing foreclosure can be an involved and time-consuming process.

“Early counseling is an important factor,” she said, stressing that counselors will continue to offer related consumer credit counseling services to help people avoid foreclosure potential.

Bullock said he chose to announce the new program in Bozeman and Kalispell this week because Gallatin and Flathead counties have been among the hardest hit in the state for foreclosures over the last few years.

While the Rural Dynamics counseling office at Ashley Square won’t open until Sept. 1, counselors are available over the phone by calling (877) 275-2227.

Another part of the foreclosure prevention program is a one-stop online resource on how to get help at: www.keepmymontanahome.com

Reporter Jim Mann may be reached at 758-4407 or by email at jmann@dailyinterlake.com.